Old Mutual Private Equity (OMPE) and Sphere Investments (Sphere) today announced that they have concluded an agreement with Johannesburg Stock Exchange listed AECI Limited to acquire 100% of Much Asphalt alongside the Much Asphalt Management team.
The deal is valued at R1.1 billion and will be financed through a combination of debt and equity.
Much Asphalt is South Africa’s largest commercial manufacturer of asphalt and bituminous binders and emulsions, with its products principally being used in the road surfacing industry. The company has an unrivalled national footprint, and is the only player with a nationwide presence, which combined with Much Asphalt’s high levels of service, consistency of supply, reputation and quality of product further strengthens its offering.
We believe that an investment in the country’s road infrastructure, a key enabler of economic growth and job creation, aligns with the objectives of the Government of National Unity. This, combined with Much Asphalt’s strong competitive offering, means that the company is well-positioned to play a meaningful role in South Africa’s road infrastructure spend over the medium to long term.
This transaction marks the first and anchor investment in OMPE’s newly launched OMPE Fund VI. OMPE and Sphere will partner with the management team over the investment tenure and through our stewardship, capital and perspective, seek to generate transformative growth and business transformation in order to provide an attractive return to our investors and contribute meaningfully to the lives of the employees and communities within which we operate.
Jacci Myburgh, Co-Head of OMPE said: “We have confidence in the infrastructure repair initiatives under the new South African Government and actively look to invest behind sectors that we think will recover to more normal levels over the medium to long term, compared to a volatile and abnormal last ten years for the South African economy. An effective road network is critical to the exciting re-build that is underway in South Africa, which should stimulate economic growth and lead to the creation of new jobs. Much Asphalt is a clear market leader and we look forward to working alongside the management team to grow the business.”
Burchert Johannes, Investment Principal at OMPE said: “Much Asphalt has a deeply experienced, best-in-class management team. Their experience, technical knowledge and commerciality has seen the company successfully navigate through several industry cycles and we look forward to partnering with them and Sphere to pursue the Company’s growth ambitions.”
Mohammed Sabi, Director at Sphere, said: “Road infrastructure plays a pivotal role in enabling economic development, connecting South Africans and empowering previously disadvantaged communities in isolated parts of our country. Our investment in Much Asphalt is a continuation of our 21-year track record of investing in high quality businesses which supply critical goods and services to their customers. We look forward to working with OMPE and the management team to unlock the growth opportunities available to the business in both South Africa and the broader SADC region.”
Bennie Greyling, Managing Director of Much Asphalt said: “We have built a solid business that is well-placed to benefit from the catch-up in the road infrastructure spend backlog in the country. We look forward to the next chapter in our business growth through the partnership with Old Mutual Private Equity and Sphere, two highly respected financial investors in the South African landscape.”
The transaction is expected to close during the first quarter of 2025, subject to customary regulatory approvals.